INVESTMENT MANAGEMENT SERVICES AGREEMENT
This Agreement dated as of October 14, 2005, is by and between AXP High
Yield Tax-Exempt Series, Inc. (the "Corporation"), a Minnesota corporation, on
behalf of its underlying series fund, RiverSource Tax-Exempt High Income Fund
(the "Fund") and RiverSource Investments, LLC (the "Investment Manager"), a
Minnesota limited liability company.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Corporation hereby retains the Investment Manager, and the
Investment Manager hereby agrees, for the period of this Agreement and
under the terms and conditions hereinafter set forth, to furnish the
Corporation continuously with suggested investment planning; to
determine, consistent with the Fund's investment objectives and
policies, which securities in the Investment Manager's discretion shall
be purchased, held or sold and to execute or cause the execution of
purchase or sell orders; to prepare and make available to the Fund all
necessary research and statistical data in connection therewith; to
furnish all services of whatever nature required in connection with the
management of the Fund as provided under this Agreement; and to pay
such expenses as may be provided for in Part Three; subject always to
the direction and control of the Board of Directors (the "Board"), the
Executive Committee and the authorized officers of the Corporation. The
Investment Manager agrees to maintain an adequate organization of
competent persons to provide the services and to perform the functions
herein mentioned. The Investment Manager agrees to meet with any
persons at such times as the Board deems appropriate for the purpose of
reviewing the Investment Manager's performance under this Agreement.
(2) The Investment Manager agrees that the investment planning and
investment decisions will be in accordance with general investment
policies of the Fund as disclosed to the Investment Manager from time
to time by the Fund and as set forth in its prospectus and registration
statement filed with the United States Securities and Exchange
Commission (the "SEC").
(3) The Investment Manager agrees that it will maintain all required
records, memoranda, instructions or authorizations relating to the
acquisition or disposition of securities for the Fund.
(4) The Corporation agrees that it will furnish to the Investment Manager
any information that the latter may reasonably request with respect to
the services performed or to be performed by the Investment Manager
under this Agreement.
(5) The Investment Manager is authorized to select the brokers or dealers
that will execute the purchases and sales of portfolio securities for
the Fund and is directed to use its best efforts to obtain the best
available price and most favorable execution, except as prescribed
herein. Subject to prior authorization by the Board of appropriate
policies and procedures, and subject to termination at any time by the
Board, the Investment Manager may also be authorized to effect
individual securities transactions at commission rates in excess of the
minimum commission rates available, to the extent authorized by law, if
the Investment Manager determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Investment Manager's overall
responsibilities with respect to the Fund and other funds for which it
acts as Investment Manager.
(6) It is understood and agreed that in furnishing the Fund with the
services as herein provided, neither the Investment Manager nor any
officer, director or agent thereof shall be held liable to the Fund,
shareholders, the Corporation or its creditors for errors of judgment
or for anything except willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or reckless disregard of
its obligations and duties under the terms of this Agreement. It is
further understood and agreed that the Investment Manager may rely upon
information furnished to it reasonably believed to be accurate and
reliable.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Corporation agrees to pay to the Investment Manager on behalf of
the Fund, and the Investment Manager covenants and agrees to accept
from the Corporation in full payment for the services furnished, a fee
based on the net assets of the Fund as set forth in the following
table. The asset charge for each calendar day of each year shall be
equal to the total of 1/365th (1/366th in each leap year) of the amount
computed. The computation shall be made for each day on the basis of
net assets as of the close of business. In the case of the suspension
of the computation of net asset value, the fee for each day during such
suspension shall be computed as of the close of business on the last
full business day on which the net assets were computed. Net assets as
of the close of a full business day shall include all transactions in
shares of the Fund recorded on the books of the Fund for that day.
The asset charge shall be based on the net assets of the Fund as set forth in
the following table.
RiverSource Tax-Exempt High Income Fund
Assets Annual rate at
(billions) each asset level
First $1.0 0.490%
Next 1.0 0.465
Next 1.0 0.440
Next 3.0 0.415
Next 3.0 0.390
Over 9.0 0.360
(2) The fee shall be paid on a monthly basis and, in the event of the
termination of this Agreement, the fee accrued shall be prorated on the
basis of the number of days that this Agreement is in effect during the
month with respect to which such payment is made.
(3) The fee provided for hereunder shall be paid in cash by the Corporation
to the Investment Manager within five business days after the last day
of each month.
Part Three: ALLOCATION OF EXPENSES
(1) The Corporation agrees to pay:
(a) Fees payable to the Investment Manager for its services under
the terms of this Agreement.
(b) Taxes.
(c) Brokerage commissions and charges in connection with the
purchase and sale of assets.
(d) Custodian fees and charges.
(e) Fees and charges of its independent certified public
accountants for services the Corporation or Fund request.
(f) Premium on the bond required by Rule 17g-1 under the
Investment Company Act of 1940.
(g) Fees and expenses of attorneys (i) it employs in matters not
involving the assertion of a claim by a third party against
the Corporation, its directors and officers, (ii) it employs
in conjunction with a claim asserted by the Board against the
Investment Manager except that the Investment Manager shall
reimburse the Corporation for such fees and expenses if it is
ultimately determined by a court of competent jurisdiction, or
the Investment Manager agrees, that it is liable in whole or
in part to the Corporation, and (iii) it employs to assert a
claim against a third party.
(h) Fees paid for the qualification and registration for public
sale of the securities of the Fund under the laws of the
United States and of the several states in which such
securities shall be offered for sale.
(i) Fees of consultants employed by the Corporation.
(j) Directors, officers and employees expenses which shall include
fees, salaries, memberships, dues, travel, seminars, pension,
profit sharing, and all other benefits paid to or provided for
directors, officers and employees, directors and officers
liability insurance, errors and omissions liability insurance,
worker's compensation insurance and other expenses applicable
to the directors, officers and employees, except the
Corporation will not pay any fees or expenses of any person
who is an officer or employee of the Investment Manager or its
affiliates.
(k) Filing fees and charges incurred by the Corporation in
connection with filing any amendment to its articles of
incorporation, or incurred in filing any other document with
the State of Minnesota or its political subdivisions.
(l) Organizational expenses of the Corporation.
(m) Expenses incurred in connection with lending portfolio
securities of the Fund.
(n) Expenses properly payable by the Corporation on behalf of the
Fund, approved by the Board.
(2) The Investment Manager agrees to pay all expenses associated with the
services it provides under the terms of this Agreement.
Part Four: MISCELLANEOUS
(1) The Investment Manager shall be deemed to be an independent contractor
and, except as expressly provided or authorized in this Agreement,
shall have no authority to act for or represent the Corporation.
(2) A "full business day" shall be as defined in the By-laws of the
Corporation.
(3) The Corporation recognizes that the Investment Manager now renders and
may continue to render investment advice and other services to other
investment companies and persons which may or may not have investment
policies and investments similar to those of the Fund and that the
Investment Manager manages its own investments and/or those of its
subsidiaries. The Investment Manager shall be free to render such
investment advice and other services and the Corporation hereby consent
thereto.
(4) Neither this Agreement nor any transaction made pursuant hereto shall
be invalidated or in any way affected by the fact that directors,
officers, agents and/or shareholders of the Corporation are or may be
interested in the Investment Manager or any successor or assignee
thereof, as directors, officers, stockholders or otherwise; that
directors, officers, stockholders or agents of the Investment Manager
are or may be interested in the Fund or Corporation as directors,
officers, shareholders, or otherwise; or that the Investment Manager or
any successor or assignee, is or may be interested in the Fund as
shareholder or otherwise, provided, however, that neither the
Investment Manager, nor any officer, trustee or employee thereof or of
the Corporation, shall sell to or buy from the Fund any property or
security other than shares issued by the Fund, except in accordance
with applicable regulations or orders of the SEC.
(5) Any notice under this Agreement shall be given in writing, addressed,
and delivered, or mailed postpaid, to the party to this Agreement
entitled to receive such, at such party's principal place of business
in Minneapolis, Minnesota, or to such other address as either party may
designate in writing mailed to the other.
(6) The Investment Manager agrees that no officer, director or employee of
the Investment Manager will deal for or on behalf of the Corporation
with himself as principal or agent, or with any corporation or
partnership in which he may have a financial interest, except that this
shall not prohibit:
(a) Officers, directors or employees of the Investment Manager
from having a financial interest in the Fund or in the
Investment Manager.
(b) The purchase of securities for the Fund, or the sale of
securities owned by the Fund, through a security broker or
dealer, one or more of whose partners, officers, directors or
employees is an officer, director or employee of the
Investment Manager provided such transactions are handled in
the capacity of broker only and provided commissions charged
do not exceed customary brokerage charges for such services.
(c) Transactions with the Fund by a broker-dealer affiliate of the
Investment Manager as may be allowed by rule or order of the
SEC, and if made pursuant to procedures adopted by the Board.
(7) The Investment Manager agrees that, except as herein otherwise
expressly provided or as may be permitted consistent with the use of a
broker-dealer affiliate of the Investment Manager under applicable
provisions of the federal securities laws, neither it nor any of its
officers, directors or employees shall at any time during the period of
this Agreement, make, accept or receive, directly or
indirectly, any fees, profits or emoluments of any character in
connection with the purchase or sale of securities (except shares
issued by the Fund) or other assets by or for the Fund.
(8) This Agreement shall be governed by the laws of the State of Minnesota.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect for two years, or until a new
agreement is approved by a vote of the majority of the outstanding
shares of the Fund and by vote of the Fund's Board, including the vote
required by (b) of this paragraph, and if no new agreement is so
approved, this Agreement shall continue from year to year thereafter
unless and until terminated by either party as hereinafter provided,
except that such continuance shall be specifically approved at least
annually (a) by the Board or by a vote of the majority of the
outstanding shares of the Fund and (b) by the vote of a majority of the
directors who are not parties to this Agreement or interested persons
of any such party, cast in person at a meeting called for the purpose
of voting on such approval. As used in this paragraph, the term
"interested person" shall have the same meaning as set forth in the
Investment Company Act of 1940, as amended (the "1940 Act").
(2) This Agreement may be terminated by either the Corporation on behalf of
the Fund or the Investment Manager at any time by giving the other
party 60 days' written notice of such intention to terminate, provided
that any termination shall be made without the payment of any penalty,
and provided further that termination may be effected either by the
Board or by a vote of the majority of the outstanding voting shares of
the respective Fund. The vote of the majority of the outstanding voting
shares of the Fund for the purpose of this Part Five shall be the vote
at a shareholders' regular meeting, or a special meeting duly called
for the purpose, of 67% or more of the Fund's shares present at such
meeting if the holders of more than 50% of the outstanding voting
shares are present or represented by proxy, or more than 50% of the
outstanding voting shares of the Fund, whichever is less.
(3) This Agreement shall terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning as set forth in
the 1940 Act.
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as
of the day and year first above written.
AXP HIGH YIELD TAX-EXEMPT SERIES, INC.
RiverSource Tax-Exempt High Income Fund
By: /s/ Xxxxxx X. Xxx
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Xxxxxx X. Xxx
Vice President
RIVERSOURCE INVESTMENTS, LLC
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Senior Vice President
